With WTI crude trading at the lower end of the US$40 range, investors looking to get into the oil market and exploit the beaten down valuations of the industry should focus on some important characteristics. Specifically, look for companies with low debt levels (or none at all) in order to hedge against the possibility of a default on interest payments, as well as trying to seek out the businesses that manage to produce positive operating incomes. EBITDA, or Earnings Before Interest, Tax, Depreciation & Amortization, is a good proxy for O&G operating profits, since it adds back the large depreciation expense usually carried by industry players. That being said, the companies on our list today have this type of financial soundness to success even in the current environment.
Chinook Energy Inc. (TSX: CKE) – $0.70
Oil & Gas Exploration and Production
Chinook Energy Inc. is a Calgary-based petroleum and natural gas production company focused on development and exploration opportunities in western Canada. The Company has assets in the Plains-West Central District, the Grande Prairie District and the Peace River Arch District, and its operations combine multi-zone conventional production and resource plays in its Western Canadian Sedimentary Basin producing properties and undeveloped land predominately located in northwestern Alberta and northeastern British Columbia.
- Market Cap: $150,665,065
- Total Debt (LFQ): $0
- EBITDA (LTM): $12,512,000
- Cash From Operating Activities (2014): $53,104,000
Leucrotta Exploration Inc. (TSXV: LXE) – $0.93
Oil & Gas Exploration and Production
Leucrotta Exploration Inc. is an oil and natural gas company engaged in the acquisition, development, exploration, and production of oil and natural gas reserves in northeastern British Columbia, Canada. The Company is a Montney focused producer with lands located in the Dawson-Sunrise area in northeast British Columbia. Its acreage in the area is approximately 115,000 gross (100,000 net) acres or approximately 180 gross (155 net) sections of Montney land. Its production is approximately 2,400 barrels of oil equivalent per day (boepd).
- Market Cap: $161,258,604
- Total Debt (LFQ): $0
- EBITDA (LTM): $9,514,000
- Cash From Operating Activities (2014): $15,365,000
Mapan Energy Ltd. (TSXV: MPG) – $1.26
Oil & Gas Exploration and Production
Mapan Energy Ltd., formerly Paris Energy Inc. (Paris), is a Canada-based exploration and development company engaged in the business of acquiring, exploiting and exploring for oil and gas in Western Canada. In the Deep Basin North area, it has 126,811 net acres of which there are 100,211 net acres undeveloped. Production from 63 wells is predominantly from the Nikanassin Formation that can be characterized as a shore face deposit in the lower Nikanassin which is overlain by thick stacked braided river deposits of the upper Nikanassin.
- Market Cap: $91,981,763
- Total Debt (LFQ): $0
- EBITDA (LTM): $14,409,460
- Cash From Operating Activities (2014): $12,385,000
Pan Orient Energy Corp. (TSXV: POE) – $1.29
Oil & Gas Exploration and Production
Pan Orient Energy Corp. is a Canada-based junior oil and gas company engaged in exploration and development of petroleum and natural gas. The Company focuses on two primary areas, which includes exploration and development in Asia, principally in Thailand and Indonesia, and heavy oilsands exploration in northern Alberta.
- Market Cap: $72,502,650
- Total Debt (LFQ): $0
- EBITDA (LTM): $562,000
- Cash From Operating Activities (2014): $12,362,000
TAG Oil Ltd. (TSX: TAO) – $1.20
Oil & Gas Exploration and Production
TAG Oil Ltd. is a Canada-based oil and gas producer and explorer with assets consisting of approximately 2.06 million net acres of land onshore in the Taranaki, East Coast, and Canterbury Basins of New Zealand, and 30,816 net acres of land offshore in the Taranaki Basin. The Company controls a land holding in the country, consisting of oil and gas permits amounting to approximately 1.5 million net acres of land onshore and approximately 0.6 million net acres offshore. The Taranaki Basin is an emerging oil, gas and condensate province located on the North Island of New Zealand.
- Market Cap: $74,761,502
- Total Debt (LFQ): $0
- EBITDA (LTM): $20,996,450
- Cash From Operating Activities (2014): $28,627,530
Source: Thomson Reuters
LTM – Last Twelve Months
LFQ – Last Fiscal Quarter
Y/Y – Year over Year
